Bankable Business Plan for Successful Project Financing
When mining executives approach Mining Salons team to list their properties or to look for financing, they are often not prepared for one of the first questions that our team asks: “Do you have a business plan?” Invariably, the answer is: “No, do I need a business plan?”. The resounding answer is: “Yes, you do!”.
A good business plan will help you attract the financial support you need. We call that a bankable business plan. A bankable business plan shows potential investors and bankers that you are highly profit oriented and that you clearly understand your competitive environment, and the risks of your project.
Mining Salons can take you through the steps of producing quality financial projections, and how to identify and specify specific concerns that matter to potential lenders and investors. In this short guide, we reveal to you the secrets behind creating compelling and successful business plans that are sure to attract financial backers. Your business plans need to communicate several points:
Good business plans are not general marketing document or investor presentation.
The business plan is a thorough and detailed document that is different than the concise format of an investor presentation. It is a document with a specific purpose – it will create a roadmap for the successful presentation of your business. There will be multiple steps in this roadmap – starting with analysis of the major trends in the industry, of economic, social and regulatory factors, moving on to company market and products, operating and financial plans, and concluding with an actionable project plan that defines main milestones, their timetable and why you are confident you can achieve them.
Your company is profit oriented.
You need to make clear that profit is your focus and that you are personally committed to make your company profitable. The best way to illustrate this is through calculating operating and financial metrics, such as revenue, OPEX, cash flows (before and after tax), payback period, IRR, and NPV. Your financial prognosis should include scenario planning based on different product prices and interest rates.
Your plan highlights your competitive advantage.
Knowledge of your competitive advantage is important in designing a dynamic business plan. Design convincing language that clearly communicates that advantage. Your plan should emphasize the belief that your product or process is different than the competitors’. You can achieve an engaging illustration by positioning your company within the industry based on certain parameters and highlighting your areas of strength and superiority.
Your plan is transparent.
Your plan should include all key facts about your company, and it should not skirt on details that might affect investor returns. It should list and rank the project specific risks, as well as include mitigation strategy for each risk. Your bankable business plan will describe all technical work done on the property, including drilling programs, feasibility studies etc. You should describe well what the current financing round aims to achieve and how money will be spent.
Last but not least, your team is qualified.
The plan must demonstrate that you are qualified to undertake the project, and that you and your board members have the technical, legal and financial knowledge to make the plan successful. A good way to show that is to include professional descriptions of your executive team members and board members. Ultimately, the success of your venture will depend on your ability to manage the daily operations of your business. Nothing speaks to it more powerfully than previous experience and success.
On a concluding note, remember that the business plan is a living document. Be prepared to frequently update and revise your plan. And don’t forget - Mining Salons is your partner in this journey and we are always here to help.